The core goal of most merchants is to maximize profits. This goal can be achieved in a number of ways, but the most basic method is by maximizing sales. Maximizing or increasing sales can itself be achieved in a number of ways. However, one of the most basic ways for a merchant to increase sales is to increase the traffic, or number of potential customers, to his store.
Every day, millions of people visit various retail locations. The overwhelming majority of these “prospective” customers purchase something from the store, thereby converting the prospective customer into an “actual” customer. Thus, simply by increasing the number of prospective customers to a store, a merchant is likely to increase the number of purchases by actual customers and, in turn, realize an increase in profit. Merchants operating in a brick-and-mortar environment long ago realized this as a fundamental principle of business.
Creating an incentive, then, for potential customers to physically visit a store is of the utmost importance for any retailer. Merchants have used various methods to achieve this goal, including through the use of loyalty programs, gift certificates, convenient store location, and the like. However, one of the most tried-and-true methods is to appeal to bargain shoppers. Offering a discount on items or the potential for a discount on items will invariably attract cost-conscious consumers.
Discounting items in a store is generally done via one of two ways. Either individual items are marked down ad-hoc by store employees, or items in bulk are marked down, generally on a scheduled basis, by discounting an entire stock-keeping unit (SKU) of the same product. Both of these implementations have downsides. Discounting items by hand requires store employees to spend time re-labeling each item every time the price is reduced to reflect the particular item's price reduction. It is thus costly to implement more than one price reduction on individual items. Discounting items by entire SKU is less time-intensive than hand-marking, but lacks the ability to mark down individual items. Further, because discounting items by entire SKU is generally done on a scheduled basis (for example, every Sunday in a grocery store when the weekly sales fliers come out), customers can schedule their visits to the store. It would be advantageous to retailers for potential customers to make more trips to their stores.
Another time-tested method that retailers use to create an incentive for potential customers to visit a store is through the creation of contests. The appeal of contests, of course, is largely due to the possibility of winning the contest. Contests can take many forms including sweepstakes, treasure hunts, or drawings. While each contest will invariably be unique, the overreaching idea of all contests is that once potential customers are drawn to the store by the contest, they are more likely to purchase something from the store than had they not been drawn to the store. Holding a contest is not without its costs, however. The cost of overhead in administering the contest as well as the cost of the prizes themselves must be factored in when deciding to hold a contest.
Some retailers have gone one step further and combined aspects of discounted prices with aspects of a treasure hunt-type contest. A merchant will mark down individual items in the store, and advertise to potential customers that it has done so, but not tell the customers which items it has marked down. In this manner, the store creates a “treasure hunt” for those people who are bargain shopping. The combination of the potential to purchase discounted items plus the appeal of a “contest” in the form of a treasure hunt will likely drive customer traffic to retailers. Thus, there is a need for a cost-effective implementation that facilitates such a combination.
Current implementations vary from the rudimentary hand-affixed paper labels to more modern electronic price tags. However, none of these solutions is fully effective in meeting the needs of the industry.
While it may be necessary to hand label a first label of an item, it is not efficient to perform subsequent hand labeling of the same item. Having employees re-label by hand individual items is extremely time intensive. Often, these employees would be better served tending to a value-added activity of the store. And because hand re-labeling is an activity performed by people (rather than a machine) the possibility of errors exists. For example, a store employee may accidentally mark down more or less merchandise than was intended, or mark down altogether incorrect merchandise.
Several advances have been made in the field of electronic price tags. However, on the whole, these tags are bulky and costly. It would be extremely expensive and inefficient to place one of these electronic tags on each individual item in the store. Because these tags are generally placed at the SKU level, they suffer from many of the same problems as traditionally-labeled tags. Individual items cannot be discounted. Further, when discounting is done on a scheduled basis, customers can minimize their trips to a retailer's store (which decreases customer traffic). Thus, there is a need for a streamlined, low cost, efficient method of discounting individual items in a store.